Information on four investment proposals is given below: Information on four inv
ID: 2521528 • Letter: I
Question
Information on four investment proposals is given below: Information on four investment proposals is given below Investment Proposal S (350,000) S (110,000) $ (130,000) S (2,250,000) 152,400 199,500 Investment required Present value of cash inflows Net present value Life of the project 491,800 3,004,600 S 141,800 S 42,400 $ 69,500 S 754,600 5 years r years 6 years 6 years Required 1. Compute the project profitability index for each investment proposal. (Round your answers to 2 decimal places.) Investment Profitability Project Proposal Index 2. Rank the proposals in terms of preference DCBA O CABD BCAD ABCDExplanation / Answer
1. Project Profitability Index:
A = $141,800 / $350,000 = 0.41
B = $42,400 / $110,000 = 0.39
C = $69,500 / $130,000 = 0.53
D = $754,600 / $2,250,000 = 0.34
2. b. CABD